Euro Reaches Nineteen-Month High, Predictions for Further Gain
The Euro's resilience shows no signs of waning, as it reached a high not seen since the spring of last year, surpassing the 1.09 dollar mark for the first time since April 2022 on Monday mornings. But fear not, Euro traders, as this upward trend is set to continue.
Despite the Euro's remarkable recovery in recent months, it dropped to 0.9536 dollars in September 2022, due to concerns about a potential economic downturn in Europe caused by the Russian attack on Ukraine. However, the gloomy economic forecasts have starting to brighten up, offering hope for continued Euro strength.
Why is the Euro shining so brightly? According to portfolio manager Thomas Altmann of asset manager QC Partners, the common currency's wings can be attributed to the belief that the European Central Bank (ECB) will tighten monetary policy more aggressively than the Fed this year. Furthermore, the allure of rising interest rates makes investments in the Eurozone more attractive for international investors.
ECB President Christine Lagarde has made it clear that she intends to combat high inflation by pursuing a tight monetary policy. Last week, she reaffirmed her pledge for continued tightening during a panel discussion at the World Economic Forum in Davos. However, it seems that some had their doubts about the ECB's determination to hike interest rates. Luckily, ECB council member Klaas Knot came to the rescue over the weekend, stating that the ECB should continue its interest rate hikes by half a percentage point at the next two meetings, suggesting that the Euro will stay on the upswing at least until the summer.
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As far as the chart is concerned, the Euro's rally appears to be far from over. The upward trend since autumn remains intact, with the "Golden Cross" at the end of December giving another buy signal. As long as the Euro stays above around 1.07 dollars, the rally is set to continue, with the next target marks being 1.12 and 1.13 dollars, purely from a technical perspective.
In conclusion, despite the ECB's current tendency toward monetary easing, expect more of the same from the Euro. While the ECB's recent moves may put downward pressure on the Euro, it's the Fed's monetary policy decisions that will heavily influence the EUR/USD exchange rate moving forward. So, keep an eye on the Federal Reserve's next move - it might just be the factor that determines whether the Euro keeps shining or faces some cloudy days ahead.
The resilience of the Euro, partially fueled by anticipation of more aggressive monetary policy tightening from the European Central Bank (ECB) compared to the Federal Reserve, has resulted in a rise in interest for the Eurozone among international investors, contributing to its ongoing strength in the finance industry. As a result, the Euro has reached a high not seen since the spring of last year and is expected to continue its upward trend, potentially reaching targets of 1.12 and 1.13 dollars based on technical analysis.
